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Cutting the Cord debate losing steam?

Discussion in 'DIRECTV General Discussion' started by Satelliteracer, Apr 19, 2011.

  1. sigma1914

    sigma1914 Well-Known Member DBSTalk Club

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    I was going by this chart and didn't think rinky-dink 100k-300k providers really mattered.
    [​IMG]

    By the way, Verizon has 3.7 now...not 3.9: http://www.vision2mobile.com/news/2011/04/at-t-verizon-telco-tv-tops-7-million.aspx
     
  2. bakerfall

    bakerfall Godfather

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    Who is "they" in your "they aren't making profit" comment? Both Hulu and Netflix made profits and paid the studios/networks for the content, so they made profits as well. Is it on par with DirecTV? No, but it doesn't have to be.

    You're also looking at this from the point of view of those making money. I'm looking at it from the point of view of my wallet. I don't care how much money is being made off these technologies, what I care about is what it's costing me. Will those prices stay at $8/month? Probably not. Will they ever cost me what DirecTV costs me now? No.
     
  3. jpl

    jpl Hall Of Fame

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    At some point you HAVE to care about how much money they're making off these technologies, because if they don't eventually turn profitable... if there's no ROI... then the technology goes away. I'm sure there were some real ardent fans of Betamax... and HD DVD... doesn't mean that they're profitable. And at the end of the day, if they're not profitable, there is no incentive for these companies to keep them around.
     
  4. jpl

    jpl Hall Of Fame

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    You're right, I was off by a bit with Verizon's numbers. In terms of who counts... I was countering the one post that used some of those very rinky dink MSOs! That post included companies like Cox and Charter. So, it's somehow invalid for me to point out that Verizon and AT&T are on par with some of the companies that were included in the post? Huh? My question was, and remains: what is the poster basing his assertion that TV isn't a core business for Verizon and AT&T, and therefore shouldn't be counted in the discussion? What makes them not worthy of being involved in the discussion? What evidence is there that TV service isn't a core business for them?

    Is it size? Last I checked, size doesn't equate to core business. I can have a tiny business making widgets - that doesn't mean that widgets aren't my 'core business'. But size does count in terms of impact on the market... fine. But again... if you use size as a measure then VERIZON AND AT&T ARE ON PAR WITH HALF THE COMPANIES THAT THE POSTER LISTED.

    Is it investment? Because both companies have invested very heavily in rolling out TV service. And how to explain Verizon's streaming ap type service? I guess someone forgot to tell Verizon that TV isn't a core business for them. Because apparently they didn't get the message.

    Edit - in terms of not counting the 'rinky dink' companies, aren't you kinda defeating your own point? You said that being in the top ten was no big deal because there were only 15 such companies out there. Um, no, there are alot more than 15 such companies. And the fact that both verizon and at&t are now bigger than most of the traditional cable companies out there tells me that they're very serious about TV.
     
  5. bakerfall

    bakerfall Godfather

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    I have no idea where you are getting this idea that they aren't profitable. They may not be AS profitable as Cable or Sat, but they aren't losing money.

    Netflix is making $50-60 mil per quarter (source)

    Hulu is expecting revenue of around $500 million this year.
     
  6. sigma1914

    sigma1914 Well-Known Member DBSTalk Club

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    We agree on about everything here lol.
    They (VZN/ATT) deserve inclusion in the discussion more so than bottom feeder companies. But they're serious because they're new kids on the block. Cable companies have been the only game in town for decades in many, so shiny new companies like V & A are breaths of fresh air. Can they remain players? Hopefully. The "newness" might wear off and they'll be just another MSO company.

    Side question - Is the streaming ap you mention like the useless TWC one where you only stream on your home network or can it go anywhere?
     
  7. Ed Campbell

    Ed Campbell Hall Of Fame

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  8. sigma1914

    sigma1914 Well-Known Member DBSTalk Club

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    Those will change a lot once carriage agreements expire. Netflix rates will be a lot different (higher) in 3-5 years.
     
  9. Ed Campbell

    Ed Campbell Hall Of Fame

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    Technology upgrades - which are rolled out at a higher price - can be accompanied by collateral benefits at no extra charge. If the providers have half a brain. Yes - that means Comcast broadband.

    They rolled out their 100mbps service a week or so ago - for more money than I could afford. But, at the same time my 6-12mbps subscription went to 10-20mbps. I haven't been mentioning it because I thought it might be a local fluke; but, friends the other side of the country have been experiencing the same.
     
  10. HarryD

    HarryD Icon

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    I just said goodbye to DirecTV myself... Have to try to cut costs... Got a great bundled package from RCN - TV/Phone/Internet (including Tivo Premere) for $130 per month..
    I was paying $98 for DirecTV, $50 for Verizon phone, and $50 for Broadband.
    I have had satellite service since 1997.
     
  11. espaeth

    espaeth AllStar

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    You're absolutely right about the costs going up, but I think it's going to be more expensive sooner than 3-5 years. Many of Netflix' streaming contracts expire starting this year:

    http://blog.moviefone.com/2011/03/15/netflix-future-contracts/
     
  12. Skyboss

    Skyboss Icon

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    Ivory tower classes? I'm over half way to retirement. Jeesh. Read my posts. I am talking about the real world. :nono:

    For example:

     
  13. jpl

    jpl Hall Of Fame

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    Netflix overall is profitable. What if they went streaming only? And $500 million for revenue is pretty good. What are their costs? What type of revenue would they need to make up what they get now from traditional video distribution? That's the key. It costs X to make the content. They're not going to voluntarily switch to a distribution mechanism that gives them significantly less than X. Also realize that the cost of distribution goes up under an IP only paradigm. Meaning that to make the same profit that they're making now, revenues would have to be even higher than what they currently are for traditional video distribution methods.

    There is also the cost that the market will bear. At what price point will users reject this paradigm? At what point would you? Would you be willing to pay $200/month for what you're streaming now? That's another consideration - price drives demand. You increase it and your overall demand takes a hit. I may make a mint if I could sell gold-plated toilet seats, but if there isn't a market for it - if I can't find customers willing to shell out $1000 for a toilet seat - then there is no market.

    BTW, as evidence of what I'm talking about - right from the very same link you included:

    "Responding to concerns that its costs to acquire movie and TV content would soon rise exponentially as Netflix’s customer base grows, Founder and Chief Executive Reed Hastings told analysts on a conference call that the company would work to maintain a 14% operating profit margin, and spend on content only in accordance with that target."

    Getting access to streamed content is very expensive.
     
  14. jpl

    jpl Hall Of Fame

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    Yeah, it does sound like we're both arguing from the same side of the issue :). Too much coffee on my end, I guess.

    There are two flavors to what they're producing, actually. One is an in-home streaming ap which will let you use your BD player or gaming system as an STB. The router that they give you will do the authentication.

    The second is far more far-reaching, and I was pretty surprised when they unveiled at this year's CES - it's truly a streaming ap. They were running FiOS TV via a Samsung BD player, e.g. Looking at the Samsung menu, you had a FiOS TV selection right next to the Netflix selection. They're literally talking about letting you run FiOS TV outside their network. Right now, apparently, they're getting their legal ducks in a row, but apparently they're pretty far along with that.
     
  15. tulanejosh

    tulanejosh Godfather

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    I'm saying based on realities of the activites those companies engage in. All the companies i listed - they do 1 or 2 things.. PayTV and Internet. VZ and ATT do a ton of other stuff from landline phones, to cell phones, to internet, etc. They are huge huge companies that have very diverse business activities. If pay tv disappeared from their product offering - it would not fundamentally alter their core mission.

    You can't say that about the companies i listed. Provided TV is what they do. They would be fundamentally different companies if they didn't provide PayTV so there response to a world where PayTV didn't exist or was delivered through alternative methods would be very different than a company that wouldn't have much philosophical issue just being the pipes. ATT and VZ ARE a pipe. They would have no issue with that on the tv side. Time Warner and Comcast would.

    If any of the other companies that i listed - had to suddenly
     
  16. bakerfall

    bakerfall Godfather

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    Hulu and Netflix have the fundamental difference that even in their paid model, Hulu has ads. This, combined with the fact that the Networks have ownership stake, certainly help with it's profitability over Netflix.

    There is no doubt that Netflix is going to have to either a.) charge more, b.) get more users or c.) have ads. There will probably be some combination of the 3 going forward.
     
  17. jpl

    jpl Hall Of Fame

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    See, but this is where you're conflating things. Many of the companies you listed are in the exact same business lines as Verizon and AT&T. The one area where they're not is in wireless. And even that's not entirely true (comcast offers a wireless data plan, from what I recall). Of those, only the two DBS companies are the truly TV-centric entities. And even that's going to change (DirecTV is working a deal with Verizon to allow rural customers to get internet via LTE through their dish).

    Also, if you haven't noticed, Verizon and AT&T have been bleeding landline customers, and the cable companies are growing in that sector at an amazing clip (Comcast is now something like the third largest 'phone' company in the country). And last I checked the cable companies are big providers of internet service as well. In other words, Verizon and AT&T are both directly in line with the cable industry.

    On top of that, both companies saw their roll-out of their next gen services (FiOS and U-Verse) as means for preserving their companies. Both HAD to do what they did just to survive. Otherwise, they would both be heading for extinction as they had no services with which to compete against traditional cable (dsl is fine, but can't really touch the speeds of cable HSI, e.g.). The success of FiOS and U-Verse are directly tied to the successes of both companies. In fact, to partly pay for the cost of rolling out both services, TV service is a big part of the equation - the ROI that they're going to get is much greater thanks to them being able to offer up TV service. Do just internet, e.g., with the fiber and both investments look spotty. I think TV service is absolutely instrumental to both FiOS and U-Verse being successful.

    If either lost TV service it would be a big loss to both companies. And make no mistake, both are huge players in the TV market. They've both been expanding like crazy, and both clearly see their futures in TV service (especially Verizon, I think - remember it was their move with the FCC that pushed for the closing of the terrestrial loophole - that wasn't the move of companies like DirecTV or Dish). I guess I don't see how you could consider either company as not being a major player in the industry. And if they are major players, then what they do definitely counts - it affects the industry as a whole.
     
  18. tulanejosh

    tulanejosh Godfather

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    And it's all a matter of perspective... you want to call them a big player? that's fine. it doesn't change my freakin point. They are phone companies - or communications companies if you prefer. What i said is that because of the way their businesses are organized and developed overtime VZ and ATT are far more comfortable being a pipe for IPTV than will Time Warner and Comcast and other traditional cable companies. They will react differently than other companies. Do you disagree with that? What is is exactly you think will happen then if ATT and VZ are the same as TWC and Comcast?

    Make no mistake though - you're wrong in your analysis of the longevity of telcos. They may become more pipe-like, but as long as they have 100MM wireless customers a piece (or some such number), they're existence and importance is not in doubt.
     
  19. jpl

    jpl Hall Of Fame

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    Yes, I disagree with that. Have you looked at TWC's latest financials? They just came out yesterday. Just like other cable companies, the trend for them has been, and continues to be:

    a) Loss of video customers.
    b) Increase in internet customers.
    c) Increase in phone customers.

    And right along with that... increased profitability. Despite their pretty heavy loss (continuing a pretty long-standing trend) of video customers, their profitability jumped. That's the trend I'm seeing in cable overall. These cable companies seem to be just fine with moving into the direction of being 'just pipes for data'. This is the same trend you're seeing with all of them. Less and less of their business, and far less and less of their profitability, hinges on video. Every quarter you're seeing cable companies become LESS married to video. There's simply no reason to think that they're in a different boat than Verizon and AT&T with regard to this.

    Meanwhile Verizon and AT&T are seeing the exact opposite. They're losing traditional phone customers, and wireline internet customers (DSL). But they're having huge jumps in video subscribers (I think their DSL losses are offset by their fiber increases, though - meaning that you're not seeing a huge growth for them in internet adds because they have an existing internet business that's losing customers, so they're offsetting the gains they're making on the fiber front... but they have no such traditional video service, so every addition there is just that... an addition). Video is becoming INCREASINGLY important for them. More and more of their business is hinging on it.

    The point is - the marketplace is changing FOR ALL THESES COMPANIES. They're all merging into becoming all in one service providers. The ONLY exceptions to that are the DBS companies who can't provide internet/voice service at a good scale. AT&T and Verizon are now operating in exactly the same market space as the Comcasts and CableVisions of the world (the ONLY exception to that is wireless). Video is as much a core business for Verizon and AT&T now as it is for companies like Comcast and CableVision. I guess I don't see how you can take a company that's now the 6th or 7th largest pay TV provider in the country, and say that they're not a major player in the video world... that video is not considered a 'core business' for them. It is!

    And if they JUST wanted to be a pipe for other services, they could very well have set up their business models to be just that. They haven't done that. There's a reason they actively went into the video business.
     
  20. sigma1914

    sigma1914 Well-Known Member DBSTalk Club

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    The 2nd one sounds very intriguing!
     

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